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Last Updated: Tuesday, 18 April 2006, 22:45 GMT 23:45 UK
New rules drag on Yahoo earnings
Yahoo chief executive Terry Semel
Yahoo boss Terry Semel remains 'excited' about Yahoo's prospects
Internet giant Yahoo has reported a drop in earnings following changes to US accounting rules.

Yahoo said net income for the first three months of the year fell to $160m (90m), from $204.6m the previous year.

The firm said new methods for deducting the expenses for its employee stock options had cost it $65m more this year than at the same time in 2005.

Yahoo said that without the changes it would have reported an 18% rise in first quarter earnings.

'Exciting prospects'

Yahoo's latest results - which were released after the close of trade in the US on Tuesday - were broadly in line with analyst expectations.

Shares in the California-based company gained 33 cents to close up $31.30 on the technology-laden Nasdaq market, and rose by a further 5% in out-of-hours trade.

Yahoo said it was continuing to capitalise on the fast-growing online advertising market, offsetting weakness in paid search advertising.

The internet icon's market value has fallen by about 20% so far this year, as the company has battled rival Google for primacy in the key internet search engine market.

But chairman and chief executive Terry Semel said he remained "very excited about Yahoo's prospects".

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